Henrique Cortes bakery prepares cakes in the morning. Day old cakes are always s

Question

Henrique Cortes bakery prepares cakes in the morning. Day old cakes are always sold at 50% discount off $16 regular price. Cost of baking cake is $10 and demand is normally distributed with a mean of 25 and standard deviation of 5. What is optimal stocking level. Refer to standard normal table for z values.
The optimal stocking level for the bakery is ___ cakes Henrique Cortes bakery prepares cakes in the morning. Day old cakes are always sold at 50% discount off $16 regular price. Cost of baking cake is $10 and demand is normally distributed with a mean of 25 and standard deviation of 5. What is optimal stocking level. Refer to standard normal table for z values.
The optimal stocking level for the bakery is ___ cakes
The optimal stocking level for the bakery is ___ cakes

Explanation / Answer

given

mean = 25

standard deviation = 5

price =16

cost =10

First calculate the optimal cycle service level
Optimal cycle service level = (p – c)/ (p – s) = (16 – 6)/ (10 – 5) = 0.8

SL =Cs/Cs+Ce = 10/(10+5)

=0.6666

The optimal stocking level for the bakery is 0.666 cakes

SL =Cs/Cs+Ce = 10/(10+5)

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